Early Morning Call: FTSE 100 opens lower, after setting new all-time high

Equity market overview

Equity markets were mixed this morning in the APAC region.

The Nikkei outperformed as the yen lost ground against all major currencies. Hong Kong’s Hang Seng was the worst performer in the region, dragged down by tech stocks.

On Friday, US indices ended the session lower following a strong non-farm payrolls (NFP) report that sent the US dollar higher. More than half a million jobs were created in January, when the market expected 185,000. The December number was also revised upwardly to 260,000, from a previous estimate of 223,000.

And the unemployment rate fell to 3.4% from 3.5% the previous month. Economists anticipated a rise to 3.6%.

In Europe, indices open lower, consolidating after a positive weekly performance. On Friday afternoon, the FTSE 100 set a fresh all-time high, and France’s CAC 40 traded above 7,200 points, for the first time since January 2022.

In Germany, factory orders rose by 3.2% in December month-on-month (MoM), after a 5.3% decline the previous month, and beating market expectations of a 2% rise.

At 10am, we await Eurozone retail sales for the month of December. Economists expect a 2.5% fall compared to November 2022, down 2.7% year-on-year (YoY).

Earnings season

We have now passed the peak of the US earnings season. The market is still awaiting a few big names over the next three weeks.

As for this week Hertz Global Holdings is scheduled to report tomorrow, followed on Wednesday by Walt Disney and Uber Technologies, and on Thursday by Philip Morris International, PepsiCo, and Lyft.

Walt Disney’s results, to be published on Wednesday after US market close, will mark the first quarter with Bob Iger back at the helm. On November 20, Iger was called back by the Disney board, following the immediate dismissal of Bob Chapek. Iger had previously served as CEO of the group from 2005 to 2020. Analysts expect earnings of 79 cents per share on revenue of $23.43 billion. Subscription numbers for Disney+, Hulu and ESPN+ will again be in focus.

The group's parks and recreation services had a phenomenal return to growth in 2022, and markets will be looking to see whether the group managed to keep the momentum going.

Uber Technologies, also set tot report on Wednesday, recorded a net loss of $1.2 billion in the third quareter (Q3) of 2022, $512 million of which was attributed to revaluations of Uber's equity investments. However, the company beat analysts' estimates for revenue, which grew by 72% year over year, and reported adjusted EBITA exceeded its guidance of $440 - $470 million.

As for the fourth quarter, the market expects a loss per share of 18 cents, and revenue of $8.47bn. The market will also be closely looking for the number of monthly active users, the number of trips, and the number of customers who have subscribed to Uber One.

Commodities

Oil prices posted a second weekly decline in a row, accentuated on Friday by NFP data.

Last week, The Baker Hughes total rig count fell by 12 to 759, at its lowest since the end of July 2022. The number of oil rigs in operation fell by 10 to 599.